How does the funding model work?

There have been many reports, papers and policy notes describing the intricate details of how the levy works. But, put simply, the apprenticeship levy scheme works like this:

  1. You create an employer account with the Apprenticeship Service
  2. You pay a levy equal to 0.5% of your payroll, monthly to HMRC
  3. Government adds 10% to the amount you pay each month (known as the ‘top-up’)
  4. Your Apprenticeship Service account accumulates monthly credits (2+3 above)
  5. You plan an apprenticeship scheme (NSAN can help you with this)
  6. Choose your apprenticeship standard or framework
  7. You contract with an approved training provider registered on the ROATP to deliver your apprenticeship training.  Each standard has an allocated funding band, so when you contract with your training provider you agree a price for the delivery in line with the  funding bands.
  8. Your chosen lead provider delivers your apprenticeship training and registers your apprentices with the Education and Skills Funding Agency (ESFA)
  9. You pay the provider digitally for their services via the Apprenticeship Service account
  10. Levy funding continues to accrue monthly and is accessible through your account for a period of up to 24 months.  All unused funds after this time will be removed from your digital account.

Non-Levy paying organisations

For organisations not paying the levy they will share the cost of training and assessing their apprentices with government - this is called ‘co-investment’.

The co-investment rate has changed for new apprenticeships starting on or after 1 April 2019. You will now pay 5% towards the cost of apprenticeship training. The government will pay the rest (95%) up to the funding band maximum.

ll apprenticeships that started before 1 April 2019 will continue at the previous co-investment rate of 10%.


Manage your apprenticeship training and assessment

If you do not pay the levy, you won’t be able to use the apprenticeship service to pay for apprenticeship training and assessment until at least mid-2019, unless you are receiving a transfer of funds from a levy paying employer.

Instead, you’ll need to agree a payment schedule with the provider and pay them directly for the training. The provider must prove that you have paid your contributions as a condition of government paying its contribution.

There are a couple of other things that companies need to know:

  • If you use up your levy or have insufficient funds in your Apprenticeship Service account to cover the costs of your training (because you have more apprentices than your levy will fund) the Government steps in and co-funds, the additional apprentices.
  • As from 1st April 2019 the Government pays 95% of the agreed training costs and you, as the employer, only pay 5% (that’s 5% of the agreed funding band for the specific apprenticeship being delivered)
  • From April 2019, levy paying employers can transfer funds to another employer through the Apprenticeship Service.  Transfers can be made to any employer including smaller employers in your supply chain and apprenticeship training services.  Levy paying employers will initially be able to transfer up to 25% of the annual value of the funds entering their Apprenticeship Service account.
  • If you would like us to talk you through the process or for further information, please contact your Operations Manager.  If you are not a member, contact us (link sends e-mail) to find out more about the benefits membership could bring to your organisation.

If you would like us to talk you through the process or get more please contact your Operations Manager.  If you are not a member, contact us to find out more about the benefits membership could bring to your organisation.